Driving a car into an Ann
Arbor parking structure requires a certain degree of courage; 4 x 4 wood beams
stand between floors and cracked concrete ceilings in the Maynard Street, Fourth
and Washington, Fourth and William and Forest Avenue structures. This must not
only unnerve patrons, but City Council members and taxpayers as well, since, as
stated earlier, any combination of short- to long-term repairs ranges between
six and 19 million dollars.

According to the 1987
Touche Ross survey, seven percent of governments had contracted out parking lots
or garages and 10% had planned to in the next two years.
[14] Privatization of
parking structures has many forms. Private firms will simply operate and
maintain a structure for a city, lease a structure from a city and operate and
maintain it, or, take over a structure from a city, pay for all structural
repairs, maintain and operate the facility and eventually either retain
ownership or return the facility to the city.

Ellis Parking in Grand
Rapids owns and operates parking structures in Flint, Lansing and Grand Rapids.
According to Mike Ellis, owner/president of Ellis Parking, any city like Ann
Arbor soliciting bids for a private firm to take over or operate its parking
structures would spur intense competition. Not only would three or four Michigan
firms be expected to bid – for example, Ellis Parking and National Garages and
Miller Parking in Detroit – but five or six national firms – such as, APCOA,
System, Republic, Allright and Square – might bid as well.

For fiscal year 1990, the
City has budgeted $1.416 million to operate its seven parking structures. When
the parking structures' share of "administration" is estimated, parking
structure operation costs $1.815 million. If the City were to contract operation
and maintenance of the facilities with a private firm, LGC figures estimate the
City could save $127,000 to $281,000. Please note here: Kenneth Clarkson,
co-author of The Role of
Privatization in Florida's Growth reports that the "expected range of
privatization cost savings" should be halved when applied to a government
service run in the form of an "enterprise fund" – that is, virtually
self-supporting, similar to a private business. Ann Arbor's parking system is
set up as an enterprise fund. However, the system has yet to operate fully as a
true enterprise fund. When the standard LGC expected savings range is applied,
savings reach $254,000 to $562,000.

If the City were to turn
ownership of the facilities over to a private firm, the City could also avoid
$1.294 million budgeted for restorations in 1990-91, $3.790 million in
"anticipated capital improvements" planned to be financed through revenue bonds
and the millions of dollars in subsequent restoration expenditures required to
keep the structures open well into the future. Depending on how ownership of the
structures were negotiated, the City could possibly eliminate its annual
depreciation and interest payments which, for 1990-91, amount to $1.627 million.

Ann Arbor's newest parking
structures, Ann and Ashley and Liberty Square, are owned by the Downtown
Development Authority while the City operates the structures. James Valenta, Ann
Arbor's Director of Transportation, reports that the structure proposed to be
built behind Kline's Department Store would also be owned by the DDA but would
most likely be privately run. According to Valenta, the reason for that is
two-fold: "[The City wants] to set up competition between our employees and the
private sector in order to see who can come up with innovative ways to do things
less expensively. [In addition,] there is a goal in the City budget to fix what
is old before building anything new."

A recent Ann Arbor News
article enumerates the improvements in Kalamazoo's parking structure service
since that City privatized its parking system: improved lighting, free weekend
parking, security guard patrols in golf carts which can also be used to
chauffeur customers to their cars and free assistance to drivers faced with dead
batteries or keys locked in the car.
[15]

In Kalamazoo, the city
leased its parking system to the Downtown Development Authority which is
directed by Downtown Kalamazoo Inc. (DKI). DKI, in turn, has hired Parking
Properties Inc. of Cleveland to operate and maintain the system which includes
all city-owned metered street parking, surface lots and parking ramps. Parking
Properties Inc. receives a fixed annual fee – paid out by DKI – for its services
while DKI oversees the entire parking system budget. DKI pays the city around
one million dollars per year to lease the structures. Those dollars essentially
cover Kalamazoo's debt-service for the parking system. Any outlays for capital
improvements are financed by DKI; the city has no fiscal responsibility for the
parking system.

In Kalamazoo, privatization
initially spurred an increase in parking ticket revenue due to more rigid
enforcement. As drivers in Kalamazoo have realized they can not get away without
paying for parking, meter revenue has increased 10% while the number of tickets
issued is lower than pre-privatization ticket levels.
[16]

Theoretically, Ann Arbor
could save anywhere from $1.811 million to over $13 million dollars in fiscal
year 1990 if it were able to immediately privatize solid waste collection,
landfill management and parking structure operation, maintenance and possibly
ownership. In reality, annual savings of this magnitude would not be realized
in one year, but phased in over several years. Savings would be even larger
if these figures included the opportunity cost of capital and revenues earned by
the City selling or renting all equipment – garbage trucks, earthmovers, etc. –
and property – storage and office space – related to those activities. In
addition, once a property is in the hands of the private sector, it becomes a
property-tax generating entity producing more government revenue.